Preparation:Beat together butter and sugar in small bowl with electric mixer until light and fluffy. Beat in egg, lemon peel, vanilla and salt. Gradually beat in flour until thouroughly incorporated. Add water, a few drops at a time, only until dough starts to come away from side of bowl. Wrap dough in plastic wrap. Refrigerate until firm, about 2 hours. Preheat oven to 350 deg. Lightly grease 4 cookie sheets. On lightly floured surface, roll out dough to 1/8" thickness. Cut out various shapes using cookie cutters or homemade cardboard patterns, or free- hand. Reroll scraps and cut out. Make small holes with wooden pick if planning to hang cookies.
Bake for 12 to 15 minutes or until beginning to brown around edges. Remove cookies to wire rack to cool before decorating.
Prepare icing: Beat egg whites in small bowl with electric mixer until foamy. Slowly beat in the powdered sugar. Continue to beat untion thick and creamy. Add just enough water to get a good spreading consistency.
Tint with food coloring, if you wish. Spread evenly over cookies. Decorate with glitter, sprinkles, dragees and cinnamon red hots.